UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) if the Securities and Exchange Act of 1934
Date of Report (Date of earliest event reported): January 24, 2005
L. B. FOSTER COMPANY
(Exact name of registrant as specified in charter)
Pennsylvania 000-10436 25-1324733
(State of Incorporation) (Commission File Number) (I.R.S. Employer
Identification No.)
415 Holiday Drive, Pittsburgh, Pennsylvania 15220
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (412) 928-3417
Not Applicable
(Former name or former address, if changed since last report)
-------------------------------------------------------------------------------
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
[ ] Written communications pursuant to Rule 425 under Securities Act
(17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
-------------------------------------------------------------------------------
ITEM 1.01 Entry into a Material Definitive Agreement.
a. Agreement for Purchase and Sale of Concrete Ties
On January 24, 2005, the Registrant's wholly-owned subsidiary, CXT
Incorporated ("CXT"), executed an agreement (the "Agreement"), deemed
effective as of January 21, 2005, with the Union Pacific Railroad
Company ("Railroad") under which CXT agreed to sell and the Railroad
agreed to purchase concrete ties.
CXT has agreed that a new plant in Tucson, Arizona ("Tucson Plant")
will be operational and manufacturing ties by November 21, 2005 and
will attain full production capacity by January 20, 2006. CXT also
must install new equipment at the Grand Island, Nebraska plant ("GI
Plant") by September 21, 2005 and attain full production capacity by
November 20, 2005. These dates may be extended under certain
circumstances. Both plants must utilize equipment that incorporates
the substantial equivalent of Grimbergen long-line concrete tie
technology.
While the GI Plant is shut down during the installation of the new
equipment, CXT must provide 48,000 ties to the Railroad from CXT's
current Spokane, Washington facility (fob GI Plant) or from the GI
Plant's excess production. Such ties' prices shall be the same as the
prices of other ties sold under the Agreement.
The Railroad is obliged to purchase and CXT is obliged to sell a
minimum of 100,000 ties annually from each of the GI Plant and the
Tucson Plant; the parties' minimum obligations for 2005 with respect
to the Tucson Plant are prorated based upon the date the Tucson Plant
is to be operational and manufacturing ties. Unit prices decrease as
the Railroad's estimated annual purchases from a specific plant
increase; such decreased pricing becomes effective commencing with
estimated annual purchases from a plant of 200,000 ties and continues
through estimated annual purchases from a plant of 500,000 ties.
Prices are adjusted annually, commencing January 1, 2005, based upon a
stipulated formula.
The term of the Agreement ends on December 31, 2012 for the Tucson
Plant and on December 31, 2009 for the GI Plant. The term applicable
to each of the plants may be extended for successive 2-year periods if
the Railroad provides at least 180 days advance written notice of
extension and CXT does not reject the extension within 30 days.
The Railroad has been CXT's primary customer for concrete ties and the
Registrant's largest customer for insulated rail joints. The Railroad
also purchases rail products and piling from the Registrant and is,
overall, the Registrant's single largest customer.
b. Manufacturing Agreement
On January 24, 2005, CXT entered into a Manufacturing Agreement with
Grimbergen Engineering & Projects, B.V., a Dutch limited liability
company, and Lubbers Constructiewerkplaats en Mahinefabriek
"Hollandia" B. V. (herein "Hollandia"), a Dutch limited liability
company and Grimbergen Holding B.V. (herein "Grimbergen), a Dutch
limited liability company.
Under the Manufacturing Agreement, equipment incorporating Grimbergen
long-line concrete tie technology will be produced in the Netherlands
for installation at both the Tucson Plant and the GI Plant. Hollandia
will design and manufacture the equipment while Grimbergen will
provide the plant, located in the Netherlands, at which the equipment
will be manufactured. Grimbergen will also supervise the project. CXT
will purchase the materials required for the construction of the
equipment.
For the use of the plant, CXT will pay Grimbergen three monthly rental
installments of Euro 41,166.67 for each of April, May, and June, 2005.
If the project is not completed by July 21, 2005, CXT and Grimbergen
will negotiate in good faith any required extension of the lease.
Hollandia has agreed to utilize specific individuals for the project
and CXT has agreed to pay stipulated rates for the each hour worked by
these individuals. CXT also has agreed to pay Hollandia Euro 146,400,
payable in six equal monthly installments of Euro 24,400, for the use
of certain manufacturing equipment and to pay Hollandia Euro 400,000
for certain intellectual property rights associated with the
engineering, design, testing, fabrication and installation of the
equipment. If the project is completed in accordance with
specifications and within budget, CXT shall pay Hollandia an
additional Euro 125,000.
CXT shall pay Euro 10,000 per month to Grimbergen, but not more than a
total of Euro 60,000, for supervisory services. CXT shall pay an
additional Euro 60,000 to Grimbergen if the project is completed in
compliance with the specifications and within budget. The budget is
Euro 6,752,085.
The conversion rate as of January 27, 2005 was approximately 1.3
dollars to 1 Euro and CXT bears the risk of fluctuations in currency
exchange rates.
Registrant will file the Agreement and the Manufacturing Agreement as
exhibits to its annual report on Form 10-K.
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
L. B. Foster Company
(Registrant)
Date: January 28, 2005 By: /s/ David J. Russo
----------------------
David J. Russo
Senior Vice President,
Chief Financial Officer and
Treasurer